Section 21. Power of Reserve Bank to control advances by banking companies

21. Power of Reserve Bank to control advances by banking companies .—(1) Where the Reserve Bank is satisfied that it is necessary or expedient in the public interest[2] [or in the interests of depositors][3] [or banking policy] so to do, it may determine the policy in relation to advances to be followed by banking companies generally or by any banking company in particular, and when the policy 1. Ins. by Act 55 of 1963, s. 12 (w.e.f. 1-2-1964). 2. Ins. by s. 13, ibid . (w.e.f. 1-2-1964). 3. Ins. by Act 58 of 1968, s. 6 (w.e.f. 1-2-1969). has been so determined, all banking companies or the banking company concerned, as the case may be, shall be bound to follow the policy as so determined. (2) Without prejudice to the generality of the power vested in the Reserve Bank under sub-section (1), the Reserve Bank may give directions to banking companies, either generally or to any banking company or group of banking companies in particular,[1] [as to— - (a) the purposes for which advances may or may not be made, - (b) the margins to be maintained in respect of secured advances, (c) the maximum amount of advances or other financial accommodation which, having regard to the paid-up capital, reserves and deposits of a banking company and other relevant considerations, may be made by that banking company to any one company, firm, association of persons or individual, (d) the maximum amount up to which, having regard to the considerations referred to in clause (c), guarantees may be given by a banking company on behalf of any one company, firm, association of persons or individual, and (e) the rate of interest and other terms and conditions on which advances or other financial accommodation may be made or guarantees may be given.] 2[(3) Every banking company shall be bound to comply with any directions given to it under this section.] [3] [ 21A. Rates of interest charged by banking companies not to be subject to scrutiny by courts .—Notwithstanding anything contained in the Usurious Loans Act, 1918 (10 of 1918), or any other law relating to indebtedness in force in any State, a transaction between a banking company and its debtor shall not be re-opened by any Court on the ground that the rate of interest charged by the banking company in respect of such transaction is excessive.]